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2014 private equity-backed buyout deals and exits reach highest levels since the global financial crisis

The total value of exits from private equity-backed portfolio companies throughout 2014 hit USD428bn, higher than any year previously and up from the USD330bn of exits in 2013. Christopher Elvin, Preqin’s Head of Private Equity Products, comments on the current deals and exits environment:

2014 represented the highest ever annual value of private equity-backed buyout exits. This has resulted in a significant increase in the level of capital being returned to buyout fund investors, which had almost surpassed the full-year 2013 amount as of June 2014 (the latest data available). Furthermore, the total value of private equity backed buyout deals in 2014 was 10% higher than the previous year, reaching USD332bn globally, the highest annual amount since 2007.

It was, therefore, a significant year for both private equity buyout deal making and exit activity. The exit activity is particularly noteworthy, as many managers were still looking to exit deals done in the pre-crisis years and have been waiting for improved selling conditions.

A primary outcome of the exit activity has been the record level of capital being distributed to investors. Full-year distributions for 2013 by buyout fund managers hit a record USD226bn. As of the end of June 2014, the latest data available, buyout funds had already returned USD224bn to investors, meaning 2014 is set to be a record year.

Analyzing deals by region reveals that North America saw USD181bn of deals in 2014, a 2% fall on the aggregate value in the previous year, despite an 11% rise in number of deals to 1,899. Conversely, the total value of deals in Asia in 2014 (USD42bn) was 68% higher than the 2013 figure, even with a 16% drop in number of deals in the region to 270 in 2014.

Nonetheless, North America was home to the largest private equity-backed buyout deal of the year, the USD11.5bn merger between Tim Hortons Inc. and 3G Capital-backed Burger King. The trade sale of Alliance Boots GmbH to Walgreen Co. for USD15bn was the year’s largest private equity-backed exit.

The most noticeable consequence of the record value of exits is the capital being paid back to investors. Full-year distributions for 2013 by buyout fund managers hit a record level. Over the first half of 2014 – the latest data available – buyout funds had already returned almost the same amount of capital as in the whole of 2013, suggesting full-year 2014 will significantly surpass the previous year. As many investors look to maintain and in some cases increase allocations, a significant proportion of this capital is likely to be reinvested which in turn will drive fundraising for GPs.

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